At more than $8 billion, Purdue Pharma’s settlement with the Department of Justice announced Wednesday to resolve a long-running investigation into the company’s role in the opioid crisis certainly catches the eye.
For chief compliance officers in the pharmaceutical and healthcare industries, however, it is worth looking beyond all those zeroes at the bigger trend highlighting the need for stronger compliance controls and oversight. The DOJ’s enforcement against Purdue is by far the largest in its crackdown on the nationwide opioid epidemic, but it certainly isn’t the first. For example:
- Swiss drug maker Novartis in July announced it will pay $678 million to end a long-running civil lawsuit regarding allegations of hundreds of millions of dollars paid in kickbacks to doctors to induce them into prescribing drugs to patients to boost Novartis sales.
- In July 2019, global consumer goods conglomerate Reckitt Benckiser Group reached a $1.4 billion settlement with the DOJ and the Federal Trade Commission to resolve a long-running investigation concerning the sales and marketing of its opioid addiction treatment drug Suboxone.
- Insys Therapeutics in June 2019 agreed to a $225 million global resolution to settle separate criminal and civil investigations concerning deceptive marketing and distribution of its opioid drug Subsys.
- In July 2017, Mallinckrodt Pharmaceuticals—a maker of generic oxycodone—reached a $35 million settlement with the government to resolve allegations that the drug maker failed to report suspicious orders of its pharmaceutical drugs.
All these actions—and there are more—serve as a clear warning that the government continues to expect pharmaceutical manufacturers and distributors to play a more upfront compliance role in ending the opioid crisis. Chief compliance officers haven’t been spared from liability either—in a period of three months from April-July 2019, two CCOs were charged for their individual roles in the wrongdoing.
Purdue’s path forward
Purdue, which will cease to operate in its current form and emerge from bankruptcy as a public benefit company owned by a trust or similar entity, will move forward under the guidance of an independent compliance monitor. In February, it appointed former U.S. Agriculture Secretary and Iowa Governor Tom Vilsack to fill the role.
Secretary Vilsack has “unfettered access to Purdue’s employees, books, records, and facilities,” Purdue said. “In his role as monitor, Secretary Vilsack will report to the Bankruptcy Court and Purdue’s board on Purdue’s compliance with the terms of the voluntary injunction.”
“Purdue today is a very different company,” said Steve Miller in response to Wednesday’s settlement. Miller joined the board as chairman in July 2018. “We have made significant changes to our leadership, operations, governance, and oversight.”
Even under new organization, it will be an uphill climb for Purdue to restore its image, as no other company is more publicly linked to the opioid epidemic. According to the DOJ, the criminal resolution reached Wednesday includes the “largest penalties ever levied against a pharmaceutical manufacturer,” with a $3.5 billion criminal fine and an additional forfeiture of $2 billion for profits made from the illegal conduct.
Purdue has also agreed to a settlement in the amount of $2.8 billion to resolve its civil liability under the False Claims Act (FCA). “The civil settlement was entered into to avoid the delay, uncertainty, and expense of protracted litigation,” Purdue said.
The civil settlement resolves allegations that, from 2010 to 2018, Purdue caused false claims to be submitted to federal healthcare programs, specifically Medicare, Medicaid, TRICARE, the Federal Employees Health Benefits Program, and the Indian Health Service. The government alleged Purdue promoted its opioid drugs, including the popular OxyContin, to healthcare providers (HCPs) it knew were prescribing opioids for uses that were “unsafe, ineffective, and medically unnecessary” and that often led to abuse.
The civil settlement further resolves the government’s allegations that Purdue engaged in three different kickback schemes to induce prescriptions of its opioids, including by purportedly paying certain doctors to provide educational talks to other HCPs and serve as consultants, but, in reality, inducing them to prescribe more OxyContin; paying kickbacks to Practice Fusion; and entering contracts with certain specialty pharmacies to fill prescriptions for Purdue’s opioid drugs that other pharmacies had rejected as potentially lacking medical necessity.
The Sackler family, all members of which have resigned from the Purdue board, agreed to pay $225 million in damages to resolve their civil FCA liability in the DOJ’s case. The resolutions do not include the criminal release of any individuals.